IN ANNOUNCING a snap general election for June 8, Prime Minster Theresa May said she hoped to bring “certainty and stability” to a country all at sea over its impending departure from the European Union.
For pensioners and those planning for retirement, however, the announcement has had the opposite effect. Not only does the prospect of a general election mean that the Government’s controversial triple lock, which guarantees that state pensions will rise by the higher of inflation, the increase in average earnings or 2.5 per cent each year, could well be scrapped but that a decision on when to raise the pension age will be put off too.
The Conservatives had said they would keep the triple lock in place until the next general election – which was expected to take place in 2020 – while a decision on whether the state pension age should rise to 68 earlier than 2046 as was originally planned was expected in early May. With parliament due to be dissolved on May 3 that is now unlikely to happen.
For pensioners, who want clarity on how much money they will receive from the state each year, and workers, who want to know exactly how long they will have to work before being able to retire, the picture is anything but clear.
Despite this, Aegon pensions director Steven Cameron said the election campaign could actually be of benefit to pensioners because it will allow the parties to address contentious issues such as the triple lock to give clarity on its future.
Although the Conservatives are keen to ditch the triple lock, which is not only hugely expensive but is seen as unduly favouring pensioners at the expense of working-age people, Labour shadow chancellor John McDonnell has vowed to keep it in place until 2025.
For Richard Parkin, head of pensions policy at Fidelity International, this could turn out to be a positive for pensioners, who, he said, “remain a key constituency”.
“Notwithstanding the fact the Government will be busy with Brexit I think [the election] could be very significant for pensions - rather than causing Government to postpone elements of policy making, I think it may embolden them to do more,” he said.
“I expect the rise in state pension age will go ahead under the banner of fairness and it's a long way out.
“Furthermore, I expect triple lock and pensioner benefits in general to become an election issue as Mrs May could feel she can be tough without alienating too many voters.”
Pensions campaigner Ros Altmann, who served as pensions minister under former Prime Minsiter David Cameron, said replacing the triple lock with a double lock is key move the political parties could consider “to improve older people's lives, while giving a more affordable, sustainable and fairer system for the future”.
“The 2.5 per cent commitment contained in the triple lock adds billions to the cost - it is estimated that the state pension has cost £3 billion more for the years 2010 to 2016 than if a double lock had been in place,” she said.
“The longer the triple lock lasts, the greater the future cost will be, with official forecasts predicting it will add at least £15 bn to the long-term cost of state pension provision.”
By removing what Altmann called the “arbitrary” 2.5 per cent element of the pension promise, she said the next government would be able to continue to protect pensioners’ incomes at the same time as halting the spiralling cost of state pension provision.
The latter point in particular may even negate the need to raise the state pension age at a faster rate than had been planned.
“The arbitrary 2.5 per cent figure is a political construct with no economic or social logic,” Altmann said. “When it was introduced, the state pension had fallen well behind average earnings, so it served a useful function in increasing basic state pensions to a more reasonable level, but pensions have increased significantly relative to other benefits.
“The Pensions Commission recommended only increasing state pensions in line with earnings, but perhaps the Government should offer pensioners the higher of prices or earnings inflation, as a double lock, to protect against rises in the cost of living and average living standards of those in work.
“If other benefits are being frozen, or only protected by either prices or earnings, to add the extra 2.5 per cent protection for pensioners will cause increasing resentment and also adds to pressure to increase the state pension age faster, which disadvantages those with lower life expectancy and in poorer health.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel